Justia Business Law Opinion Summaries

Appellants Inet Airport Systems, Inc., Inet Airport Systems, LLC, Michael Colaco, and April Barry appealed a judgment entered against them in this action arising from Inet’s sale of its assets to respondents Cavotec SA and Cavotec Inet US, Inc. (collectively Cavotec). Colaco was Inet’s sole shareholder and its chief executive officer and Barry was Inet’s director of administration. After the transaction, Colaco became Cavotec Inet US, Inc.’s president and a member of its board of directors, and Barry became the company’s chief financial officer. Following a lengthy trial, the jury awarded Cavotec $1.313 million against Inet, Colaco, and Barry, jointly and severally, based on the jury’s findings that: (1) Inet breached its asset purchase agreement with Cavotec by failing to forward all postclosing customer payments Inet received on Cavotec’s behalf; (2) Colaco and Barry breached the fiduciary duties they owed as Cavotec officers by causing Inet to withhold customer payments and creating false and backdated invoices to conceal Inet’s failure to pay; (3) Colaco’s conduct breached the employment contract he entered into as Cavotec Inet US Inc.’s president; and (4) Colaco and Barry converted Cavotec’s funds for their personal use. The jury also awarded Cavotec punitive damages against Colaco only. The Court of Appeal agreed the trial court erred in denying Inet’s motion: the jury’s verdict excused Cavotec from its obligation based on Inet’s breach and awarded Cavotec damages for the same breach, which was an impermissible windfall that allowed Cavotec to retain the assets it purchased from Inet without paying the full purchase price. The Court found Colaco and Cavotec Inet US, Inc. agreed California law would govern all their rights and liabilities; Colaco failed to explain how Delaware had a materially greater interest in applying its law on the fiduciary duty claims raised in this case. The Court also rejected Colaco’s contention the asset purchase agreement barred Cavotec’s claims for breach of his employment contract and punitive damages. The Court concluded Cavotec’s $1.313 award against Inet had to be offset against its failure to make a second $2 million payment owed under the APA. The Court did not disturb Cavotec’s $2 million punitive damage award against Colaco. The Court concluded Barry could not establish any error was prejudicial to her. View "Colaco v. Cavotec SA" on Justia Law

Stabilis Fund II, LLC (Stabilis) held a trust deed on an apartment complex in Indio. In 2013, Stabilis sued the owners of the property, alleging that the underlying loan was in default, seeking judicial foreclosure, and, in the interim, seeking a receiver “to make sure that the Real Property is properly maintained and that property conditions do not pose a risk of harm to tenants and third parties.” On Stabilis’s motion, the trial court appointed a receiver. In 2014, the City of Indio (City) intervened, alleging the property was a public nuisance, riddled with hazardous and substandard conditions in violation of state and local law. It moved to modify the receivership by instructing the receiver to remedy these conditions. Stabilis did not argue that the City was not entitled to the requested modification; however, it did argue that the motion was premature, that the receiver already had the necessary powers, and that it should be allowed to proceed with foreclosure. The trial court nevertheless granted the motion. The City then moved for an award of its attorney fees and expenses. The trial court granted the motion; it awarded the City $98,190.47, to be paid out of the receivership estate, if there were sufficient funds, and if not, then by Stabilis. Stabilis appealed, arguing that it was only the lender: if anyone was liable for attorney fees and expenses, it should have been the owners. More specifically, it argued that none of the three statutes cited by the City authorized the trial court’s award of attorney fees and expenses against it under the circumstances of this case. The Court of Appeal agreed, and reversed. View "Kaura v. Stabilis Fund II, LLC" on Justia Law

The Court of Appeal affirmed the trial court's judgment in favor of a good faith purchaser at a lien sale that had acquired the contents of a storage unit free and clear of plaintiff's claim that the sale violated the California Self-Service Storage Facility Act. The court held that the conversion action was barred by the good faith purchaser provisions of Bus. & Prof. Code section 21711. The court also held that the action was barred by the doctrine of judicial estoppel which precluded a party from relying upon a theory in a legal proceeding inconsistent with one previously asserted. In the first suit against the storage facility owner, plaintiff claimed the owner did not abide by the requirements of the Act. In this case, plaintiff claimed that the Act did not apply and that defendant was liable for conversion regardless of whether he was a good faith purchaser. View "Nist v. Hall" on Justia Law

Plaintiffs Yvonne Reid and Serena Wong sued defendants the City of San Diego (City) and the San Diego Tourism Marketing District (TMD) in a putative class action complaint, challenging what they allege is "an illegal hotel tax." The trial court sustained Defendants' demurrer without leave to amend on statute of limitations and other grounds. The Court of Appeal affirmed, concluding some of the causes of action were time-barred and the remainder failed to state facts constituting a cause of action. View "Reid v. City of San Diego" on Justia Law

Plaintiff and cross-defendant Duncan Prince obtained a judgment of $647,706.48 against defendant and cross-complainant Invensure Insurance Brokers, Inc. (Invensure). Invensure took nothing on its cross-complaint against Prince and his related business entity, cross-defendant ERM Insurance Brokers, Inc. (ERM). Invensure appealed, arguing the trial court wrongly decided issues related to the statute of limitations and numerous issues with respect to substantial evidence to support the judgment. It also claimed the court abused its discretion when admitting certain evidence. Prince and ERM also appealed two postjudgment orders, arguing the court erroneously granted a motion to tax costs and to deny them attorney fees. In the published portion of its opinion, the Court of Appeal found the trial court erred with respect to the validity of Prince’s offer to compromise under Code of Civil Procedure section 998, and remanded that issue for further consideration. In the unpublished portion of its opinion with respect to attorney fees, Prince argued he was entitled to attorney fees under Penal Code section 502. Invensure asserted a cause of action against him for violating this section, which included an attorney fee provision. The court denied the motion, deciding the attorney fees under the Penal Code section 502 cause of action and the cross-complaint’s remaining claims could not be apportioned. The Court of Appeal disagreed, concluding the causes of action in the cross-complaint all related to a common core of facts. Accordingly, the Court reversed the order denying attorney fees. View "Prince v. Invensure Ins. Brokers" on Justia Law

Plaintiff and cross-defendant IIG Wireless, Inc. (IIG) obtained a judgment of $401,860 against defendant and cross-complainant John Yi. IIG also sued Lauren Kim, Yi’s fiancee, who moved for and was granted a nonsuit during trial. Yi obtained a judgment on his cross-complaint for $122,000, resulting in a final judgment of $279,860 in IIG’s favor. Yi appealed the judgment and the court’s denial of his motion for judgment notwithstanding the verdict (JNOV). Before IIG’s official formation, Yi had been doing business with MetroPCS and was the owner of several out-of-state dealers. Yi, Jimmy Hu, and Seung Lee founded IIG to become another dealer for MetroPCS with stores in southern California. Between June 2007, when IIG was formed, and the end of 2008, the company opened 30 stores. Yi signed personal guarantees with MetroPCS for product to sell, as well as the leases for the retail locations, while Hu and Lee did not. IIG claims Yi committed numerous other misdeeds during his time as CEO, including directing IIG to issue payments of $48,000 to Kim, who was his girlfriend at the time. In sum, Yi argued there was no substantial evidence to support the verdict, the court made numerous errors with respect to the introduction of evidence and its conduct of the trial, and the damage award of $122,000 on his crosscomplaint was inadequate. IIG argued there was substantial evidence to support the verdict, the JNOV was properly denied, and the damage award on the cross-complaint should be reduced. In its cross-appeal, IIG argued the trial court should not have granted nonsuit as to Kim. Further, IIG contended the trial court erred by denying its motion to amend the complaint and to admit certain expert testimony. After review, the Court of Appeal concluded neither the appeal nor the cross-appeal had any merit, and therefore affirmed the judgment in its entirety. View "IIG Wireless v. Yi" on Justia Law

Google agreed with competitors, such as Apple, not to initiate contact to recruit each others' employees. In 2010, the Department of Justice filed a civil antitrust action, alleging that the agreements illegally diminished competition for tech employees, denying them job opportunities and suppressing wages. On the same day, the companies entered into a stipulated judgment, admitting no liability but agreeing to an injunction prohibiting the "no cold call" arrangements. Google posted a statement online announcing the settlement and denying any wrongdoing, with a link to a Department of Justice press release, describing the settlement terms. There was widespread media coverage. In 2011, class action lawsuits were filed against the companies by employees who alleged that the cold calling restrictions had caused them wage losses. A consolidated action sought over $3 billion in damages on behalf of more than 100,000 employees. A derivative suit, filed by shareholders in 2014, claimed that the company suffered financial losses resulting from the antitrust and class action suits and that the agreements harmed the company’s reputation and stifled innovation. Based on a three-year statute of limitations, the trial court dismissed. The court of appeal affirmed, finding the suit untimely because plaintiffs should have been aware of the facts giving rise to their claims by at least the time of the Department of Justice antitrust action in 2010. View "Police Retirement System of St. Louis v. Page" on Justia Law

Plaintiff filed a putative class action against TAXI and its CEO, alleging that TAXI operated a talent listing service without procuring the bond California's Fee-Related Talent Services Law (FTSL) requires. The Court of Appeal affirmed the trial court's grant of summary judgment for defendants, holding that plaintiff's FTSL claim amounted to no more than an assertion that he was injured by TAXI's noncompliance with the FTSL. However, mere noncompliance was not an injury caused "by a violation" of the FTSL. The court also held that plaintiff's evidence also failed to raise a triable issue of material fact as to whether he suffered an economic injury caused by TAXI's alleged violations of the FTSL, which he must have to establish standing to sue under California's Unfair Competition Law. View "Demeter v. Taxi Computer Services" on Justia Law

Aerotek provided temporary employees to Bay Bread. The temporary employees worked “under [Bay Bread’s] management and supervision.” Bread agreed to comply with federal, state, and local laws. Aerotek’s meal break policies were contained in an employee handbook, which stated that any problems should be discussed with supervisors. Bread set the temporary employees' schedules; they took their meal breaks to “ensur[e] that everyone got an uninterrupted meal break by the time five hours of their shift elapsed” based on “when things needed to come in and out of the oven.” Aerotek’s on-site account manager, Scott, visited the production facility twice daily but did not look for meal break issues. Aerotek hired Serrano as a temporary Bread employee; she acknowledged receipt of Aerotek’s employee handbook and signed forms waiving a meal period on days she worked no more than six hours. When she worked more than six hours, she sometimes took her meal breaks more than five hours after beginning work or did not take them. She never discussed the issue with Scott. Serrano filed a putative class action for failure to provide meal periods (Labor Code 226.7, 512), failure to pay wages upon termination, unfair competition, and Private Attorneys General Act penalties. The court of appeal affirmed a judgment for Aerotek. Proof that an employer had knowledge of employees working through meal periods will not alone subject the employer to liability; an employer is not required to “police” meal breaks. View "Serrano v. Aerotek, Inc." on Justia Law

Aerotek provided temporary employees to Bay Bread. The temporary employees worked “under [Bay Bread’s] management and supervision.” Bread agreed to comply with federal, state, and local laws. Aerotek’s meal break policies were contained in an employee handbook, which stated that any problems should be discussed with supervisors. Bread set the temporary employees' schedules; they took their meal breaks to “ensur[e] that everyone got an uninterrupted meal break by the time five hours of their shift elapsed” based on “when things needed to come in and out of the oven.” Aerotek’s on-site account manager, Scott, visited the production facility twice daily but did not look for meal break issues. Aerotek hired Serrano as a temporary Bread employee; she acknowledged receipt of Aerotek’s employee handbook and signed forms waiving a meal period on days she worked no more than six hours. When she worked more than six hours, she sometimes took her meal breaks more than five hours after beginning work or did not take them. She never discussed the issue with Scott. Serrano filed a putative class action for failure to provide meal periods (Labor Code 226.7, 512), failure to pay wages upon termination, unfair competition, and Private Attorneys General Act penalties. The court of appeal affirmed a judgment for Aerotek. Proof that an employer had knowledge of employees working through meal periods will not alone subject the employer to liability; an employer is not required to “police” meal breaks. View "Serrano v. Aerotek, Inc." on Justia Law